Federalism under Reagan

Report Outline
Transferring Responsibility
The Historic Relationship
Coping with Cutbacks
Special Focus

Transferring Responsibility

Repeated Effort to Cut Federal Budget

It is budget season in the nation's capital, and once again state and local government officials are anxiously waiting to see how much federal aid they will receive and how much will be cut. President Reagan and Congress seem agreed that the federal deficit, which the White House estimates will reach $222.2 billion in fiscal 1985, should be cut by $50 billion in fiscal 1986 and by half by fiscal 1988. What they are not wholly agreed on is which programs should be cut and by what amounts.

But as Congress works on its non-binding budget resolution, it seems certain that state and local governments will receive less federal aid than they have in the past. The full Senate and the House Budget Committee have agreed to eliminate general revenue sharing—no-strings funds to local jurisdictions—in fiscal 1987. In addition, the Senate approved several other program eliminations or cuts that will directly affect state and local finances; the reductions covered a variety of social service, housing, community development, health and education programs.

Final dispositions on these programs will not be made until Congress acts on the legislation actually authorizing and appropriating money for them, which will not be until later this year. But it appears almost certain that officials and taxpayers in states and communities across the country will be left with difficult choices on whether to shoulder the responsibilities and costs of several programs formerly funded by the federal government or do without them.